KPMG UK breaks £2bn barrier

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The firm created approximately 1,500 new jobs, with total staff now just over 13,000

KPMG, the professional services firm providing audit, tax, deal advisory, risk and management consulting services, has announced today an increase in revenues from £1,958m to £2,068m (nearly 6 percent) for the financial year ended 30th September 2016.

The firm responded well to the market forces which are changing the shape of professional services, specifically audit rotation and the move towards providing large scale, managed services online or in the cloud. KPMG secured the audits of companies such as John Lewis Partnership, Standard Life, Balfour Beatty and Wood Group, and its management consulting team won large managed services projects such as the Civil Service Learning contract to provide up to 400,000 civil servants with their learning and development needs.

The firm grew across all functions except risk consulting, which saw large bank remediation projects close. Highlights for the year included mid-market tax, transaction services and management consulting which all achieved double digit growth.

However, the substantial investment the firm made to adapt to the market, such as set up costs for new technology-led services resulted in a profit reduction of two percent. In addition, we changed our partner mix by investing in external hires with skills in emerging services, making 40 internal promotions and accelerating the retirement of a number of partners, all of which led to a reduction of average partner pay from £623k to £582k.

Simon Collins, UK Chairman of KPMG UK, commented:

“The shift in demand for professional services continues at pace. Stimulated by regulatory reform, audit tendering activity in 2016 was the busiest year for the FTSE 350 since the trend began in 2013. Throughout this busy year of tendering, we have won some fantastic work, maintained a FTSE 350 share of 28 percent and continue to be the largest auditor of listed businesses overall. Audit quality continues to be the number one priority for audit committees, the investor community, the regulators and the profession. We are investing substantially in audit quality, in particular in technology where we are working with IBM Watson on artificial intelligence tools and McLaren Applied Technologies on predictive analytics.”

Collins went on to comment on successes enjoyed in non-audit services in 2016:

“We worked on some of the most exciting transactions in the year, such as the LSE/Deutsche-Bourse merger and SABMiller’s acquisitions of a number of beer brands. Our National Markets tax business grew net sales by 15 percent on the back of increased demand for tax services in the regions and specialist services such as investment incentives and reward. Meanwhile our Management Consulting function saw a 13 percent increase in net sales as we saw huge demand for services such as ‘Powered Enterprise’ where we use cloud-based tools to help companies create new and more cost-effective operating models for areas such as IT services, finance, people and learning.

“I’m really excited by the huge opportunity the market presents and really proud of some of the great work we’ve done this year. As we look to next year, we are seeking to drive greater top line growth and ensure our investment in audit and transformation pays dividends at the bottom line.”

KPMG continues to be one of the most popular employers of graduates and apprentices in the country, receiving 28,000 applications for 1,200 graduate and apprenticeship places. Collins added:

“As a major employer, we continue to be hugely attractive to graduates and apprentices, with an astonishing 28,000 applications for 1,200 places. One of our biggest successes this year was piloting a new – industry first – approach to graduate recruitment. We have truncated a process which previously took several months to just several days. The new approach offers many advantages, not least including a much more diverse group of applicants. We have found that applicants from less advantaged backgrounds are often unable to engage with the lengthy traditional process and have responded really favourably to our new approach.”

The firm received approximately 28,000 applications for around 1,200 graduate and apprenticeship places;

Total tax payable of £790m to HMRC;

Average partner pay reduced from £623k to £582k;

Simon Collins was paid £1.8m, down from £2.2m in the previous year.

Looking ahead to the outlook for 2017, Collins said:

“We are living in uncertain times – with our clients considering what a break from the EU will look like and the impact of Trump’s presidency, set against continued themes of wider geopolitical unrest and terrorism. Our experts are well placed to help our clients with navigating the year ahead and, in particular, Brexit where we stole a march by appointing a senior level Head of Brexit within weeks of the vote and now have an established dedicated team assisting our firm-wide activity. I think our investment in the firm overall and the changes we’ve made to our operations have transformed our agility. I’m confident that we’re well positioned for the next year and beyond.”

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 13,500 partners and staff. The UK firm recorded a revenue of £2.07 billion in the year ended 30 September 2016. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 189,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.